Money: The Rate Game

Long-term, fixed-rate mortgages have become increasingly affordable compared with adjustable-rate mortgages (ARMs) and home-equity lines of credit (HELOCs), and that spells opportunity for homeowners. Since June, the Federal Reserve has hiked short-term interest rates six times, and typically long-term rates follow. But the current pattern runs counter to that. "It's surprising," says analyst Greg McBride of bankrate.com The average rate for a 30-year fixed-rate mortgage is now 5.81%, according to HSH Associates, while the average one-year ARM is 4.32%. And the gap is narrowing. Even Fed Chairman Alan Greenspan termed it a "conundrum" in a recent report.